1.  We have audited the attached Balance Sheet of BANARAS BEADS
 LIMITED, as at 31st March, 2011, the Profit & Loss Account and Cash
 Flow Statement of the company for the year ended on that date, annexed
 thereto. These financial statements are the responsibility of the
 company''s management. Our responsibility is to express on opinion of
 these financial statements based on our audit.
 
 2.  We conducted our audit in accordance with auditing standards
 generally accepted in India. Those standards require that we plan and
 perform the audit to obtain reasonable assurance about whether the
 financial statements are free of material misstatement. An audit
 includes examining, on a test basis, evidence supporting the amounts
 and disclosures in the financial statements. An audit also includes
 assessing the accounting principles used and significant estimates made
 by management, as well evaluating the overall financial statement
 presentation. We believe that our audit provides a reasonable basis for
 our opinion.
 
 3.  As required by the Companies (Auditor''s Reports) Order, 2003 as
 amended, issued by the Central Government of India in term of section
 227 (4A) of the Companies Act, 1956, and on the basis of checks of the
 books and records of the Company as we considered appropriate and the
 information and the explanations given to us during the course of
 audit, a statement on the matters specified in paragraphs 4 and 5 of
 the said order is annexed.
 
 4.  Further to our comments in the Annexure referred to above we report
 that:
 
 (a) We have obtained all the information and explanations, which to the
 best of our knowledge and belief were necessary for the purposes of the
 audit;
 
 (b) In our opinion, proper books of account as required by law have
 been kept by the company so far as appears from our examination of
 these books;
 
 (c) The Balance sheet, Profit and Loss Account and the Cash Flow
 Statement dealt with by this report are in agreement with the books of
 account;
 
 (d) In our opinion, the Balance Sheet and the Profit & Loss Account
 comply with the Accounting Standards referred to in subsection (3C) of
 Section 211 of the Companies Act, 1956.
 
 (e) On the basis of written representations received from the directors
 as on 31st March, 2011, and taken on record by the Board of Directors,
 we report that none of the directors are disqualified as on 31st March
 2011 from being appointed as a director in terms of clause (g) of
 subsection (1) of section 274 of the Companies Act, 1956.
 
 (f) In our opinion and to the best of our information and according to
 the explanations given to us, the said statements of accounts give the
 information required by the Companies Act, 1956 in the manner so
 required and give a true and fair view in conformity with the
 accounting principles generally accepted in India.
 
 (i) In case of the Balance Sheet, of the state of affairs of the
 Company as at 31st March, 2011; and
 
 (ii) In the case of the Profit and Loss Account, of the Profit of the
 company for the year ended on that date.
 
 (iii) In the case of Cash Flow Statement, of the Cash Flows for the
 year ended on that date.
 
 ANNEXURE TO AUDITORS'' REPORT
 
 ANNEXURE REFERRED TO IN PARAGRAPH (3) OF THE AUDITOR''S REPORT OF EVEN
 DATE ON THE ACCOUNTS OF BANARAS BEADS LIMITED FOR THE YEAR ENDED 31st
 MARCH, 2011
 
 1 (a) The Company has maintained proper records showing full
 particulars, including quantitative details and situation of fixed
 assets.
 
 (b) All the fixed assets have been physically verified by the
 management at reasonable intervals. We are informed that discrepancies
 noticed on such verification will be dealt with in the books of
 accounts as and when records are updated.
 
 (c) There was no disposal of a substantial part of fixed assets.
 
 2.  (a) As explained to us, the inventory has been physically verified
 by the management at reasonable intervals.
 
 (b) In our opinion and according to the information and explanations
 given to us, the procedures of physical verification of inventory
 followed by the management are reasonable and adequate in relation to
 the size of the Company and nature of its business.
 
 (c) In our opinion and according to the information and explanation
 given to us, and on the basis of out examination of records of
 inventory, the Company is maintaining proper records of inventory. The
 discrepancies noticed on physical verification of inventory as compared
 to the book records were not material and have been properly dealt with
 in the books of accounts.
 
 3.  (a) According to the information and explanations given to us, the
 Company had not granted any unsecured loans to the parties covered in
 the register maintained under Section 301 of me Companies act, 1956.
 
 (b) Since no amount is due to the company, there is no need to comment
 upon the rate of interest and other terms & conditions of the loans.
 
 (c) Since no amount is due to the company, there is no need to comment
 upon the terms of repayment of loans.
 
 (d) Since no amount is due to the company, there is no need to express
 our opinion on whether there is any amount overdue above Rupees one
 Lakh and whether reasonable steps needs to be taken for recovery of
 principal and interest.
 
 (e) The Company has not taken loans, secured or unsecured from parties
 covered in the register maintained under section 301 of the Companies
 act, 1956, hence sub clause (e), (f )and (g) of clause 4 (iii) of the
 Orders are not applicable.
 
 4.  On the basis of our evaluation of internal control systems and
 according to the information and explanations given to us, we are of
 the opinion that internal control systems with respect to the purchase
 of inventory and fixed assets and sale of goods and services need to be
 further improved to make it commensurate with the size of the company
 and nature of its business.
 
 5.  In respect of the transactions entered in the register maintained
 in pursuance of Section 301 of the Companies Act, 1956,
 
 (a) Based on audit procedures applied by us, the best of our knowledge
 and belief and according to the information and explanations given to
 us, we are of the opinion that the transactions that needed to be
 entered into the register maintained under Section 301 have been so
 entered.
 
 (b) As regards transactions exceeding value of Rupees five lakhs
 entered into during the financial year, we are unable to comment
 whether the transactions were made at prevailing market prices at the
 relevant time, because of the specialized nature of the items involved
 and absence of any comparable prices.
 
 6.  The Company has not accepted any deposits from the public within
 the meaning of section 58A of the Companies Act, 1956 and the Rules
 framed there under.
 
 7.  The Company has an internal audit system commensurate with the size
 and nature of the Company''s business but in our opinion its scope and
 coverage requires to be further strengthened.
 
 8.  Maintenance of cost records has not been prescribed by the Central
 Government under clause (d) of sub-section (1) of section 209 of the
 Companies Act, 1956. Therefore, the provisions of clause (viii) of the
 Companies (Auditor''s Report) Order, 2003 are not applicable to the
 company.
 
 9.  (a) In our opinion and according to the information and
 explanations given to us, the Company has been generally regular in
 depositing undisputed statutory dues including provident fund, investor
 education and protection fund, Employees'' State Insurance, Income Tax,
 Sales Tax (Trade Tax, VAT), Wealth tax, Service Tax, Customs Duty,
 Excise Duty, Cess and any other statutory dues, where applicable with
 the appropriate authorities. Further the Central Government has till
 date not prescribed the amount of Cash payable under Section 441A of
 the Companies Act. We are not in a position to comment upon the
 regularity or otherwise of the company in depositing the same.
 
 (b) According to the information and explanations given to us there are
 no cases of non-deposit with the appropriate authorities of un disputed
 dues of sales tax/service tax/customs duty/ wealth tax/ excise duty/
 Cess.
 
 10.  The company does not have any accumulated losses at the end of the
 financial year and has not incurred cash losses in the financial year
 and in the immediately preceding financial year. Accordingly, paragraph
 4 (x) of the Order is not applicable.
 
 11.  In our opinion and according to the information and explanations
 given to us, the Company has taken only Working Capital Loans from bank
 repayable on demand and have not defaulted in repayment of dues to the
 bank. The company does not have any borrowing from financial
 institutions and has not issued debentures.
 
 12.  The company has not granted loans and advances on the basis of
 security by way of pledge of shares, debentures and other securities.
 
 13.  The provisions of any statute applicable to chit fund/ nidhi/
 mutual benefit fund/ societies are not applicable to Company,
 therefore, the provisions of clause (xiii) of the Companies (Auditor''s
 Report) Order, 2003 are not applicable to the Company.
 
 14.  The company has maintained proper records for the transactions and
 contracts for dealing in or trading in shares, securities, debentures,
 or other investments and timely updation has been made in the records.
 All the investments have been held by the company in its own name.
 
 15.  As per information available to us, the Company has not given
 guarantees for loans taken by others from banks or financial
 institutions.
 
 16.  The Company has not taken any term loan from any financial
 institutions.
 
 17.  According to the records examined by us and according to
 information and explanations given to us, on an overall basis, no funds
 raised on short term basis have been used for long term investment.
 
 18.  The Company has not made during the year any preferential
 allotment of shares to parties and companies covered in the Register
 maintained under Section 301 of the Companies Act, 1956.
 
 1.9.  There are no debentures issued and outstanding during the year
 and hence the question of creating securities in respect thereof does
 not arise.
 
 20.  The Company has not raised any monies by way of public issue
 during the year.
 
 21.  To the best of our knowledge and belief and according to the
 information and explanation given to us no fraud on or by the Company
 has been noticed or Reported during the financial year.
 
                                           For Kamal Kishore & Co.  
                                           Chartered Accountants 
                                           (Firm No 007424C)
 
                                           (Kamal Kishore Srivastava) 
                                           Partner  M. No. 71639)
 
 Place: Varanasi.
 Date : 01. 07. 2011